How Do I Register a Business That Trades in Cryptocurrency

Step 1: Decide on Your Business Structure

The first step in registering a crypto business is choosing the right legal structure. The most common options are:

• Limited company: Offers liability protection and is best for most crypto trading firms. You must register with Companies House and follow UK company law.

• Sole trader: Simpler to set up but with unlimited personal liability. Suitable for smaller traders or individual investors running a business.

• Partnership: Allows two or more people to run the business together, sharing profits and tax responsibilities.

A limited company structure is generally preferred for credibility, liability protection, and access to corporate tax rates rather than personal income tax.

Step 2: Register with Companies House

If you form a limited company, you must register it with Companies House. You will need:

• A unique company name that is not already taken.

• A registered office address in the UK.

• Details of directors, shareholders, and company secretary (if applicable).

• A statement of capital (how much share capital is issued).

• Standard Industrial Classification (SIC) codes relevant to your business.

While there is no specific SIC code for crypto trading, many businesses use 66110 (Administration of financial markets) or 64999 (Financial intermediation not elsewhere classified).

Once registered, Companies House will issue a Certificate of Incorporation, confirming that your business is legally recognised.

Step 3: Register with HMRC for Tax

After forming your company, you must register with HMRC for Corporation Tax within three months of starting business activity. This includes any trading, investing, or earning income in cryptocurrency.

HMRC treats cryptocurrency as a digital asset, not legal tender. Therefore, profits from crypto trading are taxable. Businesses must:

• Record all crypto transactions in pounds sterling using market value at the time of trade.

• Report trading profits or losses in annual accounts.

• Pay Corporation Tax on profits (or Income Tax if trading as a sole trader).

• Register for VAT if taxable turnover exceeds £90,000, although crypto transactions are generally VAT-exempt.

It is essential to maintain accurate transaction records and valuations because crypto markets are highly volatile, and HMRC may request detailed evidence during tax reviews.

Step 4: Register with the Financial Conduct Authority (FCA)

If your business provides cryptocurrency services such as exchanging crypto for fiat currency, facilitating crypto transfers, or operating wallets, you must register with the Financial Conduct Authority (FCA).

The FCA regulates cryptoasset businesses under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, often called the MLR regulations.

Registration involves:

• Submitting an application to the FCA with details about your business model, ownership, and financial structure.

• Demonstrating strong anti-money laundering (AML) and know your customer (KYC) controls.

• Providing evidence that your company directors and beneficial owners are fit and proper persons to run a regulated business.

Only registered crypto businesses can legally operate in the UK. The FCA publishes a list of approved and rejected firms on its website.

If you trade crypto only for your own company’s investment purposes, you may not need FCA registration, but professional advice is recommended to confirm your position.

Step 5: Set Up a Business Bank Account

Because cryptocurrency businesses are considered high-risk by traditional banks, opening a business account can be challenging.

Look for banks or fintech providers that are crypto-friendly and offer multi-currency accounts. You may need to provide:

• A business plan outlining how your company operates.

• Details of AML and KYC procedures.

• Evidence of FCA registration (if applicable).

• Financial projections and source of funds documentation.

A clear compliance framework and professional accounting practices can make it easier to gain banking access.

Step 6: Establish Accounting and Record-Keeping Systems

Crypto businesses are required to maintain detailed accounting records that meet UK financial standards. You must keep:

• Records of all crypto transactions (dates, amounts, and market value in GBP).

• Exchange statements and wallet addresses.

• Records of income, expenses, and fees.

• Details of capital gains and losses for each tax year.

Working with an accountant experienced in crypto taxation ensures transactions are correctly categorised and valued. They can also integrate crypto tax software to automate data collection and reporting, saving time and ensuring compliance.

Step 7: Ensure AML and Compliance Procedures Are in Place

Even if your company is not regulated directly by the FCA, implementing internal compliance systems is vital. These should include:

• Customer verification (KYC) if you provide services to others.

• Transaction monitoring for suspicious activity.

• Secure data storage and reporting systems.

• Staff training on AML and financial crime prevention.

Having proper compliance procedures not only satisfies regulators but also improves your business’s credibility with clients and investors.

Step 8: Seek Professional Advice

Setting up a cryptocurrency business involves both financial and legal complexities. Consulting with professionals early can prevent costly errors later. You may need:

• An accountant to manage crypto taxation, record keeping, and HMRC compliance.

• A lawyer to draft contracts, review regulatory obligations, and protect intellectual property.

• A compliance consultant to prepare FCA registration documents and AML procedures.

Professionals familiar with cryptocurrency regulations can guide you through the process smoothly, ensuring your business meets all UK requirements.

Example: Registering a Crypto Trading Company

Imagine you want to start a crypto arbitrage trading business. You would:

1. Form a limited company with Companies House.

2. Register for Corporation Tax with HMRC.

3. Decide whether FCA registration applies (it likely won’t if you trade only for your company).

4. Set up a crypto-friendly bank account.

5. Implement accounting systems to track all trades and market values.

6. Work with an accountant to prepare your first tax return and claim allowable expenses.

By following these steps, you can operate legally, pay the correct taxes, and build a sustainable crypto business in the UK.

Summary

Registering a business that trades in cryptocurrency involves several key steps: forming a company with Companies House, registering with HMRC for tax, and potentially applying to the FCA for regulatory approval. You must also maintain detailed financial records, establish AML procedures, and ensure compliance with UK regulations.

Working with an accountant and legal adviser experienced in crypto ensures you stay compliant, reduce risk, and position your business for long-term success in this fast-moving industry.